In a recent transaction, Milton C. Ault III, the Executive Chairman of Ault Alliance, Inc. (NYSEAMERICAN:AULT), acquired derivative securities valued at $51,737. The transaction, which took place on April 17, 2024, included the purchase of Series C Convertible Preferred Stock and Series C Warrants.
The Series C Convertible Preferred Stock was acquired at a stated value of $1,000 per share. According to the filing, the conversion price for the preferred stock is subject to adjustments, but as of the transaction date, it was $0.35 per share. This conversion rate implies that each share of the preferred stock could be converted into approximately 2,857 shares of common stock.
In addition to the preferred stock, Ault also acquired Series C Warrants, which carry an exercise price of $0.35. However, the filing notes that these warrants were acquired at a transaction price of $0.00 per share. The warrants have an exercise date of October 17, 2024, and are set to expire on April 16, 2029.
The post-transaction amounts indicate that following these acquisitions, Ault's indirectly owned shares, through Ault & Company, Inc., amount to approximately 13,008,140 shares of common stock, as per the derivative table in the filing.
Investors may note that the total number of shares of common stock that can be issued upon conversion of the preferred stock or exercise of the warrants is subject to a cap set by the rules and regulations of the NYSE American. This cap is currently set at 452,214 shares, which is 19.99% of the total shares of common stock issued and outstanding as of November 6, 2023, unless Ault Alliance, Inc. obtains stockholder approval for additional issuances.
The transactions are part of the regular filings made by company insiders, providing transparency into their trading activities in the company's securities.
InvestingPro Insights
As executive chairman Milton C. Ault III increases his stake in Ault Alliance, Inc., the company's financial health and stock performance metrics provide a broader context for potential investors. Ault Alliance operates with a significant debt burden, and its ability to service that debt is in question, as it may have trouble making interest payments. This is particularly relevant given the recent acquisitions of derivative securities by Ault.
InvestingPro Data reveals a market capitalization of only $0.65 million, underscoring the small size of the company within the market. Despite a revenue growth of 16.46% over the last twelve months as of Q1 2023, the company's operating income margin was deeply negative at -49.29%, indicating substantial operating losses. Additionally, the stock price has experienced a dramatic decrease, with a 1-year price total return of nearly -100%.
Investors should also be aware that the company's stock is trading at a very low Price / Book multiple of 0.01, as per the latest data. This could suggest that the stock is undervalued relative to the company's book value, which is an InvestingPro Tip that might interest value investors. However, this must be weighed against the company's performance and financial stability challenges.
For those considering an investment in Ault Alliance, additional InvestingPro Tips are available, including insights on the stock's high price volatility and its poor free cash flow yield. To access these tips and more, visit https://www.investing.com/pro/AULT. Remember, using the coupon code PRONEWS24 will grant you an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 18 additional InvestingPro Tips available for Ault Alliance, Inc., providing a comprehensive analysis for investors.
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